We often hear home sellers say they “want”, or “need” a certain price for their home and then let that figure drive their decision on asking price. Unfortunately, a home seller’s “wants” and/or “needs” have absolutely nothing to do with the market value of their property. Your wants and/or needs may help determine whether you want to, or are able to, sell your home, but they in no way impact the selling price of your property.

Overview

The market value of your home is determined by the supply and demand for properties similar to your own. When supply exceeds demand, values go down, and when demand exceeds supply, values go up. In other words, the prevailing market conditions directly affect your property’s value, and hence, your pricing strategy must take those factors under consideration. Pricing a home on last year’s market conditions is ill-advised; you need to work with current and relevant information.

Another commonly held misconception is that somehow REALTORS^® and/or real estate brokerages can affect the market value of a property. This simply is not true. Buyers and sellers affect market value, not REALTORS^®. It is your house and the value you place upon it, that will determine whether or not you attract an offer. Remember, REALTORS^® don't attract offers... houses do! The goal when pricing your house is to do so such that you will attract offers. Rarely, in Alberta anyways, do mispriced houses attract an offer. The reason for this is that Alberta has a very efficient resale home marketplace. In other words, it has lots of activity. There are always many homes for sale, and plenty of buyers looking to buy. Over-priced homes generally get disregarded as buyers can usually find properly priced homes that they like.

So how do I choose the right price?

Correctly pricing your home at the onset of your listing is very important. As mentioned earlier, Alberta has an efficient market place and over-pricing your home will simply add to your days on market (DOM). Statistically, when houses sell, there is a wider gap between List Price and Sale Price as the DOM increases.

Included with all our Flat Fee Full Service listings is an Opinion of Value from one of our experienced local licensed REALTORS^®. In order to arrive at their Opinion of Value, your rhinoagent will prepare a Comparative Market Analysis (CMA) of your home using similar properties that have recently sold and those that are currently for sale. They may choose to communicate with other REALTORS^® that have recently sold properties in your area for even more detailed information. Their professional interpretation of this data will allow you to choose the correct price for your home based on the current market conditions. You will benefit from our experience and expertise at this most crucial stage of the selling process.

Another route you can go in order to correctly price your home is to hire a professional licensed appraiser. The cost of this service is several hundred dollars and the appraiser will use the exact same information that our REALTORS^® use. Generally speaking, in Alberta, home owners do not use these services to price a home. These services are frequently used by financial institutions for lending purposes and they are also quite prevalent in the commercial real estate market. Appraisal services are available to individual residential home owners should you wish to pay for such a report.

Market Value versus Negotiated Sale Price

We’ve talked about market value and what influences that, however, you need to be aware that “market value” and “negotiated sale price” are two different things. The difference being, that market value generally refers to a value range, for example, your home’s market value could be described as being between $425,000 and $440,000, whereas the negotiated sale price is a single figure, say $437,000.

So what influences the negotiated sale price of your home? Largely, it comes down to two things, motivation and negotiating skills.

First, the motivation of the individual buyer that has placed an offer on your home can influence this figure. For example, Buyer “A” may like your house better than, or need to buy sooner than, Buyer “B”, so even though both buyers may be prepared to submit an offer on your home, Buyer “A” will likely be prepared to pay a little more than Buyer “B”. Your own motivation, as the home seller, may also impact the negotiated sale price. Holding to a price can be difficult to do under certain circumstances, and ultimately may affect the eventual agreed upon price.

The second factor that can largely influence the negotiated sale price of your home is the respective skills of the two people involved in negotiating the purchase contract. There is little question that thousands of dollars can move one way, or the other, depending on who is negotiating for each side. It is probably safe to say that for an average priced property in Alberta today, a minimum of five thousand dollars ($5000), and at times, much more, is “up for grabs” during the purchase contract negotiations.

Rest assured, when your list your property with rhinorealty, you’re in good hands. Our agents are expert negotiators. Each of them boasts an exceptional “List Price to Sale Price” ratio. When it comes time to negotiate your offer, we know that getting the highest possible sale price is your goal, and we share that goal with you.